The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) Rebuttal and Clarifications on the “Letter to Shareholders by Unico Holdings Bhd”
(26-7-2008)
Recently the Board of Directors of Unico Holdings Bhd (“the Company”) has issued a “Letter to Shareholders” which contains quite a number of statements involving the relationship between the Company and ACCCIM and a piece of land alienated by the state government of Sabah, as well as the possible actions to be taken by ACCCIM. Many of the statements tend to be inaccurate, over generalized, specious, unjust and unfair. In light of this, ACCCIM issues this statement to put the facts in the proper perspective.
1. How did Unico Holdings Bhd come into being?
The Letter to Shareholders issued by the Board of Unico Holdings briefly states that the Company was born as one of the many holding companies formed by the Chinese community in 1980s in their effort to overcome the economic dilemma faced by the community due to the implementation of the New Economic Policy. The letter also discreet implies that it was impossible for the Chinese community to achieve economic self-reliance by pooling their capital to form such holding companies.
In fact Unico Holdings was born as a result of the painstaking efforts by ACCCIM. The land in Sabah obtained by ACCCIM was handed over to Unico-Desa Plantations Bhd (Unico-Desa), a subsidiary company of Unico Holdings, the wholly-controlled investment arm of ACCCIM, to proceed with the intended development. Unico Holdings developed and grew steadily under the stewardship and tireless efforts of ACCCIM leaders who had managed the Company with selflessness and impartiality. If not for their efforts and supervision, Unico Holdings would not have survived until now and become a Chinese-based company which continues to attract much attention.
The Standing Committee of ACCCIM officially incorporated “Unico Holdings Bhd” on 21st May 1981 with an authorized capital of RM100,000,000 comprising 100 million shares of RM1.00 each and an initial issued and paid up capital of RM2.00. The two issued and paid-up shares were each held by Wee Boon Ping (then ACCCIM President) and Low Nam Hui (then Deputy President) on behalf of ACCCIM in the capacity as subscribing directors of the Company. On 24th May 1981, the Standing Committee of ACCCIM reported that the company registration fee and incidentals totaling RM28,000.00 paid for the incorporation of the Company was advanced by Wee Boon Ping.
On 28th June 1981, the 35th Annual General Meeting of ACCCIM ratified the incorporation of Unico Holdings and resolved to grant full authority to the Standing Committee to take charge of the matter.
On 28th July 1984, ACCCIM and Unico Holdings formed a National Public Issue Committee to launch a nationwide campaign for the public issue of 49,404,998 ordinary shares of RM1.00 each to the public. The Committee and ACCCIM issued a joint statement entitled “ Striving for Excellence and Creating New Opportunities” in the various local Chinese language newspapers in conjunction with the public issue exercise. It was a joint statement by ACCCIM and Unico Holdings. It outlined the background on the founding of Unico Holdings and its commitment to implement six major tasks. In addition, officers of ACCCIM and the Committee conducted roadshows throughout the nation to explain the historical background and importance of founding and developing large enterprises funded by the Chinese community. Tan Sri Ngan Ching Wen, now Unico Holdings’ adviser and Chairman of Unico-Desa was then the Secretary General of ACCCIM and the key official of the public issue campaign. In addition, several current directors and major shareholders of Unico Holdings and Unico-Desa, including Teoh Hock Chai and Yeong Yue Chai too served in the Public Issue Committee. The public issue campaign received overwhelming response from the Chinese community and had within one and half a month, successfully received a total of 25,184 applications for subscription of shares in Unico Holdings. A great majority of applicants were small shareholders.
2. What is the relationship between ACCCIM, Unico Holdings and Unico-Desa Plantations Bhd?
The Letter of the Unico Holdings Board says, “Unico Holdings was founded at the auspice of ACCCIM but ACCCIM holds no shares in Unico Holdings and hence, ACCCIM does not own Unico Holdings . Unico Holdings is a mainly Chinese-owned holding company and was incorporated under the Companies Act. Unico-Desa Plantations is an associated company of Unico Holdings, which holds a 29% stake in Unico-Desa”.
This is an inaccurate statement which greatly plays down the close relationship between the three entities and it fails to explain why Unico Holdings’ stake in Unico-Desa has been reduced to approximately 29% now.
Unico Holdings was single-handedly founded by ACCCIM. Unico-Desa was a subsidiary company incorporated by Unico Holdings with the authority of ACCCIM after ACCCIM had obtained the land alienated by the Sabah State government. The purpose of the inception of Unico-Desa was to undertake a joint venture in the plantation sector with Korporasi Pembangunan Desa (KPD), a State agency of the Sabah State Government. ACCCIM’s Unico Holdings held a 51% equity interest in Unico-Desa while KPD had a 49% stake in the company.
In the early years, members of the Unico Holdings Board and nominees of Unico Holdings in the Unico-Desa Board were all nominated by ACCCIM. After the public issue of Unico Holdings in 1984, members of the Unico Holdings Board continued to be nominated by ACCCIM and the practice continued for many years given the trust and support of shareholders of Unico Holdings. Both Unico Holdings and Unico-Desa had come a long way under the selfless stewardship and guidance of ACCCIM. The relationship between ACCCIM and Unico Holdings was more than a relationship purely based on shareholding. In fact both ACCCIM and Unico Holdings belonged to the same family. However, certain leaders of Unico Holdings have now defined the relationship between ACCCIM and Unico Holdings solely on the basis of equity interest. Such an approach is truly shocking and tantamount to a child disowning his or her parents when he or she has grown up!
In 1987, KPD sold its 49% interest in Unico-Desa to Unico Holdings, resulting in Unico Holdings having a 100% interest in Unico-Desa. But, then how come Unico Holdings now only holds a mere 29% stake in Unico-Desa? The shareholding of Unico Holdings in Unico-Desa was diluted to 42.68% after the listing of Unico-Desa in March 2000. Nevertheless, Unico Holdings continued to maintain a strong grip on the listed Unico-Desa with the 42.68% shareholding. However, the shareholding of Unico Holdings in Unico-Desa has since reduced to the present 28.99%, making the company an associate of Unico Holdings and depriving Unico Holdings’ control over the Company.
In light of the foregoing, the management of Unico Holdings owes a convincing explanation to its shareholders. Meanwhile, the shareholding of certain directors of Unico Holdings in Unico-Desa has increased substantially. The management of Unico Holdings is obliged to explain whether such an increase in the shareholding in Unico-Desa by such directors has complied with the relevant procedures and regulations.
3. What is the dispute revolving Unico Holdings all about?
Mr. Tan Kai Hee is a member of the National Council and chairman of the Commerce Committee of ACCCIM. He had been a director of Unico Holdings for 17 years until he unsuccessfully sought re-election at the Unico Holdings Annual General Meeting held on 28th September 2007 following his dispute with the key members of the Board. Later, the dispute continued with both parties waging a media battle and some Unico Holdings leaders filing suits against Mr. Tan Kai Hee for defamation. As a result, Tan Sri William Cheng, President of ACCCIM stepped in and attempted to mediate the parties and resolve the dispute amicably and he had put forward a proposal which aimed to achieve better benefit for minority shareholders of Unico Holdings. Unfortunately, the efforts of Tan Sri William Cheng were not reciprocated by Unico Holdings and certain major shareholders of Unico-Desa.
In the meantime, what is more disheartening is that certain key personnel of Unico Holdings have publicly made remarks which not only distort the historical facts but are also grossly detrimental to the integrity and credibility of ACCCIM, drawing much attention from the Chinese community. This has caused much resentment among members of ACCCIM who feel that ACCCIM has a duty to come forward to tell the truth and do justice to itself. Entrusted with this duty, the National Council of ACCCIM at its meeting held on 10th May 2008, resolved to institute legal proceedings against certain current leaders of Unico Holdings. The decision of the National Council was later ratified by the 62nd Annual General Meeting of ACCCIM held on 28th June 2008.
4. How did the 17,000 acres of land owned by Unico-Desa Plantations Bhd come about?
The Letter of the Unico Holdings Board says, “In 1981, Tan Sri Wee Boon Ping, ACCCIM President applied to the Sabah state government for a piece of plantation land. In late 1982, the state government agreed to alienate 17,000 acres of land to Korporasi Pembangunan Desa (KPD, a co-operative society in Sabah) for the purpose of joint venture with Unico Holdings which was sponsored by ACCCIM. In 1983, the state government alienated the 17,000 acres of land directly to Unico-Desa with a 49% of Unico-Desa’s equity held by KPD and 51% held by Unico Holdings. In 1984, Unico Holdings obtained a loan of RM1.0 million from the United Malayan Banking Corporation (UMBC) to pay the land premium for the said land and the land was formally registered in the name of Unico-Desa Plantations Bhd.”
The truth is, on 17th July 1981, ACCCIM and KPD entered into a historic Memorandum of Understanding (MOU) on the joint venture in the plantations sector by agreeing to jointly develop nearly 20,000 acres of land to be alienated by the Sabah State Government. This MOU formed the basis for the alienation of the said land.
On 14th December 1982, the Sabah Chief Minister office issued a formal letter on the alienation of land, clearly stating that the 17,000 acres of land were alienated for the joint venture between KPD and ACCCIM without any mention of Unico Holdings.
On 22nd April 1983, ACCCIM President Wee Boon Ping formally informed KPD that ACCCIM had assigned its investment arm, Unico Holdings to act on behalf of ACCCIM in all matters relating to the joint venture with KPD, and stated that Unico Holdings had been authorized by ACCCIM to undertake the joint venture specified in the above MOU with KPD. Following the notification in writing by ACCCIM that Unico Holdings was the investment arm of ACCCIM, the Sabah State government agreed to register the said land in Unico-Desa as a joint venture company formed by Unico Holdings and KPD. All the above facts are substantiated with letters and agreements. Tan Sri Ngan Ching Wen signed the joint venture agreement on behalf of ACCCIM and he should be fully aware of the arrangements. Hence, to casually say that the land in Sabah was alienated to Unico-Desa by the Sabah State Government is a deviation from the truth.
The Letter of the Unico Holdings Board claims, “In 1984, Unico Holdings obtained a loan of RM1.0 million from the United Malayan Banking Corporation (UMBC) to pay the land premium for the said land and the land was formally registered in the name of Unico-Desa Plantations Bhd”.
This is only half-truth as it has not told the whole story. The RM1.0 million loan was obtained with the joint guarantee of the office bearers of ACCCIM. Furthermore, the Sabah State government had agreed to charge a preferential land premium of RM50.00 per acre because the land was alienated to ACCCIM as a non-profit making organization.
The Letter of the Unico Holdings Board adds that, “The land has been registered in the name of Unico-Desa Plantations at all times and does not belong to ACCCIM.”
Such a claim is a total distortion of facts, because Unico-Desa is holding the Sabah land in trust for ACCCIM.
5. Is it possible for ACCCIM to reclaim the ownership over the 17,000 acres of land owned by Unico-Desa in Sabah by legal means as claimed by ACCCIM?
The Letter issued by the Unico Holdings Board says, “ACCCIM claims that it wants to reclaim the ownership over the 17,000 acres of land owned by Unico-Desa in Sabah by legal means.”
In reality, ACCCIM wants to pursue the matter by commencing legal proceedings against certain key personnel of Unico Holdings responsible for their errors in their remarks and actions, distortion of facts and the betrayal of their tasks entrusted to them so as to do justice for ACCCIM and restore the rights it deserves.
6. Financial Support in Return by Unico Holdings to ACCCIM
The founding of Unico Holdings marked a new milestone in the efforts of ACCCIM to continuously provide effective services to the Chinese community since the inception of ACCCIM in 1947. During the successful public issue exercise and its continued operations over the years, members of its Board were key office-bearers of ACCCIM or its member chambers. Unico Holdings was an enterprise nurtured and conceived by ACCCIM. Hence, the contribution and donations by Unico Holdings and its subsidiary companies in 1990s and early 2000s towards the development of ACCCIM’s activities were justified. The Letter issued by the Unico Holdings Board claims that, “The total returns contributed to ACCCIM by Unico-Holdings amounted to over RM10.00 million.” This is far from the truth. Except the RM2.0 million financial supprt given to ACCCIM’s building fund in conjunction with the listing of Unico-Desa, the remaining approximately RM2.0 million represent the aggregate financial support paid in installments towards ACCCIM’s rental expenses and specific activities
During the listing of Unico-Desa in 1999, the Board of Unico Holdings resolved to issue bonus shares to its directors, resulting in much objection among its shareholders. As a result, the directors decided to donate the bonus shares to the Chinese community. At the same time, calls were made to rally minority shareholders to oppose the listing of Unico-Desa and to support the listing of Unico Holdings instead. Due to the controversy, Tan Sri Lim Guan Teik, then President of ACCCIM requested ACCCIM to assist in resolving the dispute. As a result of ACCCIM’s mediation, Unico Holdings directors decided to donate a total of 673,000 bonus shares to the building fund of ACCCIM. This donation was not made by Unico Holdings itself and was certainly not a contribution by Unico Holdings to ACCCIM.
The Letter issued by Unico Holdings Board claims, “If Unico Holdings were to contribute another RM10 million to ACCCIM, it would certainly have an impact on shareholders’ interest”.
In reality, ACCCIM has never formally and explicitly requested Unico Holdings to contribute any amount of return to ACCCIM. It is extremely unfair to ACCCIM for directors of Unico Holdings to make such one-sided statement to its shareholders while the ACCCIM and Unico Holdings are still exploring ways to seek a resolution to the current dispute and are yet to reach any agreement. This is indeed a move by the leadership of Unico Holdings to place ACCCIM and Unico Holdings in a confrontational situation so as to divert attention, causing injustice to ACCCIM.
ACCCIM hereby solemnly states that for the sake of safeguarding the interest of the Chinese community and minority shareholders of Unico Holdings, it will seek to hold certain key personnel of Unico Holdings responsible for their errors in their remarks and deeds and to do justice for ACCCIM and minority shareholders of Unico Holdings and to reclaim the rights and interest they dearly deserve.
7. Is the Capital Return Scheme beneficial to Shareholders of Unico Holdings?
The Unico Holdings Board has proposed a Capital Return Scheme to proportionately distribute the entire 29% shareholding held by Unico Holdings in the publicly listed Unico-Desa to shareholders of Unico Holdings.
The basis of distribution is 2,560 shares in Unico-Desa for every 900 shares held in Unico Holdings.
The nearly 1-year old dispute surrounding Unico began in September 2007. During the early stage of the dispute, ACCCIM President Tan Sri William Cheng personally attempted to mediate and has held not less than 10 meetings with the parties concerned from September 2007 to March 2008. On 20th October 2007, ACCCIM tabled a 4-point proposal which was approved by the parties in the dispute (leadership of Unico Holdings and Mr. Tan Kai Hee). The 4 points are as follows:
(1) That Unico Holdings chairman Tan Sri Lim Guan Teik to convene a board to approve the en bloc sale of the approximately 29% equity interest in Unico Desa held by Unico Holdings, and to seek the consent of Mr. Teo Chai Hock and Dr. Yeong Yue Chai to dispose their respective shareholding in Unico Desa together with Unico Holdings shares in Unico-Desa in order to fetch a higher price;
(2) That a merchant bank or professional body be appointed to take charge of the proposed en-bloc sale;
(3) That a general meeting of Unico Holdings be held to determine whether to distribute the proceeds from the sale of the 29% interest in Unico-Desa as return of capital under a capital reduction scheme, or to be invested in new projects; and
(4) That the parties cease their dispute through the media.
ACCCIM is of the view that the 4-point proposal satisfies the demands of both sides as it will not only resolve the dispute but also bring better benefits to the minority shareholders of Unico Holdings. Regrettably, although both sides indicated their acceptance to the proposal, the party representing the leadership of Unico Holdings has not adhered to the proposal.
In its effort to safeguard the interests and rights of minority shareholders of Unico Holdings, ACCCIM had been looking for a suitable buyer and had arranged a number of meetings between senior executives of CIMB Investment Bank Berhad with the key personnel of Unico Holdings. CIMB had approached a total of seven companies on the proposal sale of Unico-Desa shares. According to a report dated 28th February 2008 by CiMB, four of the companies had offered purchase prices ranging from RM1.07 to RM1.21 per share, which was higher than the market price of RM1.07 per share. However, the proposed en bloc sale of Unico-Desa shares did not materialize eventually due to the refusal of Unico Holdings to issue a letter of authorization and provide detail information to CIMB.
The Capital Return Scheme proposed by the leadership of Unico Holdings is apparently more beneficial to substantial shareholders and it further tightens the control of certain quarters in Unico Holdings over Unico-Desa, and for minority shareholders who sell their shares individually, it will be difficult for them to fetch a higher price for their shares.
If sold en bloc to a palm oil company , the shares in Unico-Desa held respectively by Unico Holdings, Teoh Hock Chai and Dr. Yeong Yue Chai, will be able to fetch a premium, or a return for the sale of share options, bringing higher gain for the sellers.
Thus the ACCCIM is of the opinion that the capital reduction scheme is not beneficial to the minority shareholders of Unico Holdings, and therefore should be opposed.
8. Conclusion
As a leading organization for the commercial and industrial sector of Malaysian Chinese, ACCCIM is entrusted with an important social mission. Office-bearers of ACCCIM founded Unico Holdings by adhering to the policy of developing large scale enterprises of the Chinese community and the principle of impartiality. The present leadership of ACCCIM is duty-bound to uphold such policy and principle and carry on the unfinished historic mission and commitment.
ACCCIM hereby solemnly declares that for the sake of safeguarding the interest of the Chinese community and minority shareholders of Unico Holdings, and its dignity, it has no alternative but to resort to legal means to rectify the errors of certain key personnel of Unico Holdings in their words and deeds and to do justice for ACCCIM and minority shareholders of Unico Holdings and to reclaim the rights and interest they dearly deserve.
Introduction
